TTIP and Dancing Elephants

The U.S.-EU Free Trade Agreement Negotiations

On July 8 of this year, in Washington, D.C., the United States and the European Union launched negotiations on a proposed free trade agreement called the Transatlantic Trade and Investment Partnership, or TTIP. While the two parties have negotiated free trade agreements with other countries, they have not, until now, attempted one of this magnitude with one another.1 In its Technical Barriers to Trade section, the agreement is slated to cover, among other things, cars, machinery and electronics, chemicals, medical devices, pharmaceuticals, cosmetics, textiles, and the regulations and standards associated with them.2

The U.S. and the EU are arguably the greatest economic powers in the world, which makes this no ordinary trade agreement. The magnitude of it reminds me of something I heard at a standards conference years ago, where representatives from the U.S. and the EU were describing standards systems that were markedly different in so many ways. A standards official from Australia who followed them started his talk by saying, “When elephants dance, the rest of us need to get out of the room.” Expectations are high, and a great deal of political capital is invested in this trade agreement.

On the surface, it looks good. Both economies want to ensure the health and safety of their citizens. Trading between the two powers is vigorous, and both governments want to make that trade more vigorous, so that their economies can improve. Businesses on both sides of the Atlantic are heralding the governments’ efforts to create a more efficient, profitable market.

Below the surface, it’s complicated. In the standards area, the parties are coming from different places, literally and figuratively. The European standards system is relatively new. It was formed to support the EU, which was established in 1992, and looks internally to that Union first and foremost, i.e., it admits European interests only into its standardization process and develops standards that support the regulatory framework of the EU. It participates in the development of international standards by delegation to the International Organization for Standardization (ISO), an organization located outside the EU. European government officials do not participate in the standardization process but may act as contractors for the development of standards to be referenced in technical regulations. The standards system in the U.S., on the other hand, has existed for a much longer time3 and has evolved in another direction entirely. ASTM International and other standards organizations domiciled in the U.S. admit technical experts from other countries into their standardization processes and are increasingly globally focused. These experts develop international standards within the U.S. using multiple paths and in ISO as well. U.S. government officials participate as equals in the standardization process.

The ultimate goal of TTIP is to reduce barriers to trade that exist between the U.S. and the EU. One way to do this is to eliminate the differences between standards (and regulations), and create one where there were two. The term the Europeans use for this is harmonization. Another option is for both sides to accept the differences in the standards (and regulations) and treat and trust them as they do their own, i.e., see them as equivalent. You see the problem.

Let’s step back for a moment. The parties to this agreement were parties first to the World Trade Organization Technical Barriers to Trade Agreement. As signatories, they have already agreed that standards should not create unnecessary barriers to trade and that they should use international standards in technical regulations wherever possible. They’ve also already agreed that there is a set of principles for developing international standards that will not create barriers to trade.

ASTM International and other global standards bodies in the U.S. responded to the TBT agreement by internalizing the WTO principles for developing international standards. Thousands of standards created by these bodies are operating in the global market now, having been developed by technical experts from just about every country in the world, including countries within the EU. They are highly valued collateral in the global market, technically advanced, market relevant, and in terms of facilitating trade and eliminating barriers to trade, already there.

There are no standards bodies adhering to WTO principles that are more transparent or more inclusive than those in the U.S. standards system. The U.S. system is unique; there is no other standards system like it in the world. Its strength lies in its accessibility, its openness to those beyond its borders, its respect for the viewpoints of individuals and its partnership with government. It cannot be traded for, nor should its international standards be harmonized with those that reflect a single region’s interests only. At present, these international standards are not accepted in trade with products regulated by the EU, except at a price for validation too dear to pay. We should keep this in mind as we dance.

ASTM International is not opposed to a U.S.-EU trade agreement, nor is it opposed to cooperative efforts and joint standards projects if they are meaningful, technically substantive and beneficial to our exporting members. On the contrary, ASTM International supports this effort and welcomes it. Better trade, better products, better businesses, and better economies are good for all of us, especially our members, including our European members.4 It is the position of this organization that international standards, regardless of their origins, can best support a liberalized trading system and a successful trade agreement if they are produced in accordance with WTO principles, technically advanced and market relevant. If one standard is better for exporters than two, then these should be the criteria governments consider when formulating their technical regulations. Most important, no agreement should dilute or dismantle that which is already accomplishing its goals.

Read ASTM International’s full statement that was submitted to the U.S. Trade Representative, chief negotiator for the U.S.

References

1. In 1998, the U.S. and the EU entered into Mutual Recognition Agreements in six product areas: medical devices, pharmaceuticals, recreational craft, telecommunications, electromagnetic compatibility and electrical equipment. To date, only two continue to function: telecommunications and electromagnetic compatibility.

2. Specific sectors are subject to final agreement.

3. ASTM International, for example, was established in 1898.

4. ASTM members include 1,500 individuals from leading European companies such as AREVA, BASF and Siemens; small- and medium-sized enterprises, and important stakeholder organizations.